Jack in the Box profit falls on refranchising efforts

Feb. 23, 2012

Jack in the Box Inc. reported net earnings of $12 million, or $0.27 per diluted share, for the first quarter ended Jan. 22, compared with net earnings of $32.4 million, or $0.61 per diluted share, for the first quarter of fiscal 2011.

The company said its Q1 profit decline was mostly due to lower gains in the sale of company-owned restaurants to franchisees.

Gains on the sale of company-operated Jack in the Box restaurants were $1.1 million in the 2012 quarter, or approximately $0.02 per diluted share. This compares to gains of $27.9 million, or approximately $0.34 per diluted share, in the year-ago quarter from the sale of 88 restaurants.

However, same-store sales for both the Jack in the Box and Qdoba brands were up systemwide.

Jack in the Box

The company's Jack in the Box chain reported a 5.3 percent increase in same-store sales for company-owned restaurants, compared to 1.5 percent during the same period last year. Franchised units were also up 2.8 percent, compared to 0.9 percent last year.

"Jack in the Box company same-store sales increased driven by a combination of traffic growth as well as an increase in average check. On a two-year cumulative basis, this represented a 500 basis point acceleration from the fourth quarter of 2011 and our sixth consecutive quarter of sequentially improving company same-store sales trends," said Linda A. Lang, chairman, CEO and president.

She added these results were driven by the company's investments in enhancing the entire guest experience, including the completion of its reimaging program.

Qdoba

Qdoba's same-store sales were also up for both company- and franchise-owned restaurants, although not as high as last year. For Q1 2012, company-owned restaurant sales increased 3.5 percent, compared to 5.8 percent last year.

Franchise same-store sales were up 4 percent, compared to 6.6 percent. For the system, same-store sales increased 3.8 percent, versus 6.4 percent for the same period last year.

This was Qdoba's fourth consecutive quarter that two-year cumulative same-store sales have been greater than 9 percent, according to Lang.

Restaurant openings

Sixteen new Jack in the Box restaurants opened in the first quarter, including 11 franchised locations, compared with eight new restaurants opened system-wide during the same quarter last year, of which three were franchised.

In the first quarter, 15 Qdoba restaurants opened, including nine franchised locations, versus 20 new restaurants in the year-ago quarter, of which 14 were franchised.

As of Jan. 22, the company's system total comprised 2,236 Jack in the Box restaurants, including 1,602 franchised locations, and 597 Qdoba restaurants, including 335 franchised locations.

Guidance

For the second quarter 2012, same-store sales are expected to increase 4 to 5 percent at Jack in the Box, versus 0.8 percent last year. At Qdoba, same-store sales are also expected to rise 4 to 5 percent, versus 6 percent a year ago.